But what’s particularly interesting about this spike in fertility is that there was a correlation with cash incentives for new parents.

Christopher Wood, author of CLSA’s weekly Greed & Fear newsletter, pointed out in his latest installment that the highest fertility rate among Tokyo’s wards was in the Minato Ward, where parents get one-time cash payouts of up to 180,000 yen – about $1,684 – a birth.

Moreover, he noted that the biggest improvement in fertility in the country was in a town called Ama on the island of Nakanoshima, which has a “leveraged scheme to incentivize mating”: parents get 100,000 yen (about $940) for the first baby, but get 1 million yen (about $9,400) for the fourth kid. The town’s fertility rate bumped up to 1.80 from 1.66 between 2014 and 2015.

Wrote Wood in the note:

This fits a point made by GREED & fear before, namely that the best way to deal with Japan’s demographic issue is via financial incentives, with ¥10 million per child seeming to [us] about the minimum level of incentive required in central Tokyo given the costs of parenthood, a reality [we are] well aware of.

CLSA

Notably, some economists have argued that women who lived in developed economies are dis-incentivized to reproduce precisely because having kids is very expensive. Or, another possibility here, as o n e of my economics professors once put it a few years back: “Why would a woman choose to have another kid that costs $250,000 a year when she can instead go work in finance and rake in $1 million a year?”

So Wood’s ideas are quite interesting: It appears that cash incentives, at least somewhat, address the whole issue of not having kids because they’re too expensive.

Wood added in his note:

In the end nothing can detract from the power of financial incentives.Just as higher minimum wages will encourage the acceleration of robot technology, the provision of a meaningful capital sum should encourage child rearing. It is certainly superior to negative rates, and also more reflationary.